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High Court Of Delhi
CHIEF CONTROLLING REVENUE AUTHORITY - Appellant
Versus
SATYAWATI SOD - Respondent
Stamp Duty Reference 2 of 1969
Decided On : 12/20/1971
STAMP DUTY - LEASE - ORAL AGREEMENT ACCOMPANIED BY DELIVERY OF POSSESSION - SUBSEQUENT RECORD OF TERMS - CHARGEABILITY TO STAMP DUTY - INTERPRETATION OF SECTION 2 (16) (B) AND ARTICLE 35 OF SCHEDULE I OF THE INDIAN STAMP ACT, 1899.
Fact of the Case:
Five identical letters were written by Smt. Satya Wati to five addressees, recording the terms of an oral lease agreement for a furnished cinema building from month to month with effect from 3rd March 1961 at a monthly rent of Rs. 2700. The question arose whether these letters were liable to stamp duty under Article 35 of Schedule I-A (Delhi) of the Stamp Act as being a "lease" as defined in section 2 (l6) (b) of the Act.
Finding of the Court:
The court held that the letters constituted a "lease" within the meaning of section 2 (16) (b) of the Stamp Act and were chargeable to duty under Article 35 of Schedule I thereof.
Issues: 1. Whether the letters were liable to stamp duty under Article 35 of Schedule I-A (Delhi) of the Stamp Act as being a "lease" as defined in section 2 (l6) (b) of the Act? 2. Whether the documents were rightly produced before the E. T. O. within the meaning of section 33 of the Indian Stamp Act, 1899? 3. Whether the impoundment by the E. T. O. , as such, is valid ?
Ratio Decidendi: 1. The court interpreted section 2 (16) (b) of the Stamp Act and Article 35 of Schedule I to hold that the letters were chargeable to stamp duty because they constituted a "lease" as defined in the Act. The court reasoned that the letters were not merely a record of a previous oral agreement, but rather formed part of the same transaction and completed the creation of the lease. 2. The court found that the documents were voluntarily produced before the Entertainment Tax Officer and were therefore "produced" before him within the meaning of section 33 of the Stamp Act. 3. The court held that the Entertainment Tax Officer was "a person in-charge of a public office" within the meaning of section 33 of the Stamp Act and had the power to impound the instrument as it appeared to him that it was not duly stamped.
Final Decision: The court answered the main question in the affirmative, holding that the letters were liable to stamp duty under Article 35 of Schedule I of the Stamp Act. The court also answered the other two subsidiary questions in the affirmative, holding that the documents were rightly produced before the E. T. O. within the meaning of section 33 of the Stamp Act and that the impoundment by the E. T. O. was valid.
( 1 ) THE main question on which our opinion is ught in this reference under section 57 (2) of the Indian Stamp Act, 1899, is whether the five indentical letters dated 6th March 1961 written by Smt. Satya Wati to Jagdish Rai, Raman Kumar, Ajay Kumar, Satish Kumar and Sudershan Rani are liable to stamp duty under Article 35 of Schedule l-A (Delhi) of the Stamp Act as being a "lease" as defined in section 2 (l6) (b) of the said Act.
THE letters open with the following sentence:- "with reference to the oral arrangements arrived at with you on 3rd March, 1961 we have to put on record the same as under. "the rest of the letters are supposed to be a record of the various terms of the lease, as many as seventeen, said to have been agreed between the parties orally on 3rd March 1961. Briefly, the arrangement was to be that a lease of a furnished cinema building was given to Satya Wati by the five addressees (lessors) from month to month with effect from 3rd March 1961 on a monthly rent of Rs. 2700.
( 2 ) UNDER section 107 of the Transfer of Property Act, it is only a lease of immovable property which is from year to year or which is for a term exceeding one year or which reserves a yearly rent that can be made only by a registered instrument. The second paragraph of section 107 which is relevant is as follows:-
"all other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession. "a lease from month to month can thus be made either by a registered instrument or by an oral agreement accompanied by delivery of possession. For the purposes of the Stamp Act, the chargeability of aninstrument to duty has to be determined, as a rule. on the recitals made in the deed. The recital in the deed in question is that on 3rd March 1961 an oral arrangement was arrived at. Though a valid oral lease from month to month on a monthly rent could thus be given by the lessor to the lessees without involving any question of payment of stamp duty or registration, does this position change if the terms of the oral lease are recorded in writing. ? To answer this question, we have to look to the scheme of the relevant statutes.
( 3 ) FIRSTLY, the first two paragraphs of action 107 of the Tranter of Property Act lay down only two modes of making leases, namely, (1) by a registered instrument and (2) by an oral agreement accompanied by delivery of possession. Between these two, there is no half way house. That is to say, a lease cannot be made by an unregistered instrument only as distinct from an oral agreement accompanied by delivery of possession. It is to be noted that the proviso to section 107 enables a State Government by notification in the official Gazette to direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession. These half way houses can constitute valid leases only if they are authorised by a notification by the State Government under the proviso to section 107. Since no such notification is said to exist in Delhi, it is common ground that a valid lease in Delhi can be made only either by aregistered instrument or by an oral agreement accompanied by delivery of possession. In the present case it is the second mode of making a lease, namely, by an oral agreement accompanied by delivery of possession which was adopted. What is contended on behalf of the Revenue is that the letters dated 6th March 1961 which reduced the terms of the oral lease to writing constitute a part of the same transaction of lease and form the lease itself. They are, therefore, the half way house which is not authorised in Delhi by section 107 of the Transfer of Property Act inasmuch as they are an unregistered instrument of lease. If the contention of the Revenue is correct, then the
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